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United States Government Accountability Office:
Washington, DC 20548:
March 16, 2006:
Congressional Committees:
Subject: Agency Management of Contractors Responding to Hurricanes
Katrina and Rita:
In February 2006, we briefed the staffs of your committees on the
results of our review of various contracting issues related to the Gulf
Coast hurricanes. We conducted this work under the Comptroller
General's statutory authority in order to assess how three agencies-the
Federal Emergency Management Agency (FEMA), the U.S. Army Corps of
Engineers (USAGE), and the General Services Administration (GSA)-
planned for and conducted oversight of several key contracts in support
of Katrina and Rita response and recovery efforts. The briefing
document is attached.
After we completed our work and briefed your staffs, the House Select
Bipartisan Committee to Investigate the Preparation for and Response to
Hurricane Katrina and later the White House issued reports based on
their reviews of the various hurricane response issues. These reports
contain findings and recommendations intended to address a number of
the issues identified in our briefing. Additionally, we understand that
the Senate Committee on Homeland Security and Governmental Affairs will
be issuing its report later this month and that various inspectors
general are proceeding with their reviews as well. In general, while
the inspectors general are reviewing a broad range of contracting
issues, such as competition and pricing, we focused our efforts on
contract planning and oversight. During the course of our work, the
agencies informed us that they are taking a number of steps to address
the issues that have been identified, and we reflected those actions in
the briefing where appropriate. Given these developments, we are not
making any recommendations at this time; however, we continue to
monitor agency actions in this area.
We provided this briefing document to the Department of Homeland
Security (DHS), the Department of Defense (DOD), and GSA for review and
comment. While DOD did not have any comments, the Corps of Engineers
provided some technical clarifications, which we incorporated in the
briefing where appropriate. Officials at DHS said they had no further
comments beyond those provided at the agency exit conference, which
were incorporated where appropriate. GSA provided technical comments,
which have also been incorporated in the briefing.
We are sending copies of this briefing to interested congressional
committees, the Administrator of General Services, and the Secretaries
of Defense and Homeland Security. We will make copies available to
others upon request. This briefing also will be available on the GAO
Web site at http://www.gao.gov. Should you or your staff have any
questions, please contact me at (202) 512-4841. Key contributors may be
found on the last page of the briefing.
Signed by:
William T. Woods:
Director, Acquisition and Sourcing Management:
Enclosure:
List of Committees:
The Honorable Susan M. Collins:
Chairman:
The Honorable Joseph I. Lieberman:
Ranking Minority Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Tom Davis:
Chairman:
Select Bipartisan Committee to Investigate the Preparation for and
Response to Hurricane Katrina:
Chairman:
Committee on Government Reform:
House of Representatives:
The Honorable Henry A. Waxman:
Ranking Minority Member:
Committee on Government Reform:
House of Representatives:
The Honorable Peter T. King:
Chairman:
The Honorable Bennie G. Thompson:
Ranking Minority Member:
Committee on Homeland Security:
House of Representatives:
(120495):
Briefing for Congressional Staff:
March 2006:
Briefing:
Agency Management of Contractors Responding to Hurricanes Katrina and
Rita:
Why GAO Did This Study:
The private sector is an important partner with the government in
responding to and recovering from natural disasters such as Hurricanes
Katrina and Rita. As we recently noted, [NOTE 1] such partnerships
increasingly underlie critical government operations.
With hundreds of billions of tax dollars spent each year on goods and
services, it is essential that all federal agency acquisitions be
handled in an efficient, effective, and accountable manner. The fact
that disasters, such as hurricanes, are not entirely predictable must
not be an excuse for poor contracting practices. Nevertheless, the
circumstances created by the hurricanes created a difficult environment
in which agencies had to balance the need to deliver goods and services
quickly with the need for appropriate controls.
Under the Comptroller General's statutory authority, GAO conducted work
to assess how three agencies planned for and conducted oversight of
several key contracts in support of Katrina and Rita response and
recovery efforts: the General Services Administration (GSA), the
Federal Emergency Management Agency (FEMA), and the U.S. Army Corps of
Engineers (USAGE). A number of efforts are underway by these agencies
to address the issues we and others have identified. This briefing does
not contain any recommendations.
All three agencies reviewed this briefing and either had no comments or
provided technical clarifications, which we incorporated where
appropriate.
NOTE:
[1] GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington, D.C.: February 2005).
Overview:
Background:
Congress has appropriated over $62 billion as an initial commitment of
federal support to the Gulf Coast states impacted by the recent
hurricanes. The government's response to Hurricanes Katrina and Rita
depended heavily on contractors to deliver ice, water, and food
supplies; patch rooftops; and provide housing to displaced residents
and temporary facilities to local government agencies.
In any acquisition, agencies need to have in place sound acquisition
plans, processes to make and communicate good business decisions, and a
capable acquisition workforce to monitor contractor performance so that
the government receives good value for the money spent. These
components are critical to successfully managing contracts in any
environment-even in a contingency situation such as that presented by
Hurricanes Katrina and Rita.
In reviewing contracts awarded for Iraq-another contingency situation-
GAO found that without effective acquisition planning, management
processes, and sufficient numbers of capable people, poor acquisition
outcomes resulted. GAO made recommendations regarding the need for:
ensuring that requirements for placing orders are within the scope of
contracts; timely definition of contract terms and conditions; and
sufficient numbers of trained staff who have clear responsibilities and
guidance for overseeing contractor performance. Having these
capabilities requires preparation, such as having pre-arranged
contracts in place in advance of the disaster or other contingency.
Summary of Findings:
Given the environment in which they were operating, agency acquisition
and contractor personnel worked hard to provide the goods and services
required, often working long hours in order to be responsive. The
response efforts nonetheless suffered from:
* Inadequate planning and preparation to anticipate requirements for
needed goods and services.
* Lack of clearly communicated responsibilities across agencies and
jurisdictions.
* Insufficient numbers and inadequate deployment of personnel to
provide for effective contractor oversight.
Briefing Structure:
Risk Areas:
Inadequate planning and preparation;
Lack of clearly communicated responsibilities;
Insufficient numbers and deployment of oversight personnel.
Appendix:
Scope, methodology, and contributors.
Related GAO Reports:
Continuity of Operations: Agency Plans Have Improved, but Better
Oversight Could Assist Agencies in Preparing for Emergencies, GAO-05-
619T (Washington, D.C.: Apr. 28, 2005).
Results-Oriented Government: Improvements to DHS's Planning Process
Would Enhance Usefulness and Accountability, GAO-05- 300 (Washington,
D.C.: Mar 31, 2005).
Homeland Security: Effective Regional Coordination Can Enhance
Emergency Preparedness, GAO-04-1009 (Washington, D.C.: Sept. 15, 2004).
Continuity of Operations: Improved Planning Needed to Ensure Delivery
of Essential Government Services, GAO-04-160 (Washington, D.C.: Feb.
27, 2004).
Inadequate Planning and Preparation:
Some key agencies involved in responding to the disaster did not have
adequate acquisition plans for contingency situations. For example:
While contracts for some items were in place prior to the storm, the
Federal Emergency Management Agency (FEMA) did not adequately
anticipate needs for such services as providing temporary housing and
public buildings.
The practice of the U.S. Army Corps of Engineers (USAGE) is to
establish Planning and Response Teams for various missions assigned to
it by FEMA prior to an event, with specific responsibilities assigned
to team members. However, the Corps indicated it did not know prior to
the hurricane that it would be tasked by FEMA with some of the mission
assignments it received. In one case, FEMA tasked the Corps with
acquiring temporary classrooms for Mississippi within a very short time
frame. To meet the requirement, USAGE placed a non-competitive order on
a pre-existing agreement for portable buildings. Information in the
contract files suggests the negotiated prices were inflated and
indicates USAGE did not have sufficient time or information to ensure a
good acquisition outcome. [NOTE 2]
Similarly, better management of requirements development could have
avoided costs to house workers and victims. Based on information
provided by local officials, FEMA spent $3 million for 4,000 base camp
beds that were never used.
Preparation was also lacking in implementation of the Stafford Act
preference for contractors residing or doing business in the affected
area. [NOTE 3] USAGE staff expressed uncertainty regarding how to apply
preferences or determine if a company was in an affected area. Several
General Services Administration (GSA) and FEMA officials indicated they
were aware of the Stafford Act but stated it is difficult to
immediately factor in local businesses in such a catastrophic event.
GSA officials stated they plan to review the Federal Acquisition
Regulation (FAR) to see if additional Stafford Act guidance is
necessary.[NOTE 4]
In discussing our findings and observations with FEMA officials, they
indicated they were taking steps to improve in areas such as staffing
and pre-mobilization capabilities in order to better respond to future
disasters. However, they also stated that such pre-planning and
preparedness has a cost. The USAGE commented that contracting staff
need to have defined requirements in order to get the right type of
contracts put in place and, unfortunately, the contracting staff did
not always get defined requirements in a timely manner. Additionally, a
USAGE official commented that until funding for a particular mission is
secured, preparation for the mission cannot go forward and this also
delayed contracting efforts. Finally, both GSA and the USAGE noted that
they tried to reach out to local and small businesses through forums
and other means to make them aware of opportunities to contract with
the federal government.
NOTES:
[2] GAO, Hurricanes Katrina and Rita: Contracting for Response and
Recovery Efforts, GAO-06-235T (Washington, D.C.: Nov. 2, 2005).
[3] 42 U.S.C. § 5150.
[4] See the FAR, Subpart 26.2-Disaster or Emergency Assistance
Activities.
Related GAO Reports:
* Hurricanes Katrina and Rita: Contracting for Response and Recovery
Efforts, GAO-06-235T (Washington, D.C.: Nov. 2, 2005).
* Interagency Contracting: Problems with DOD's and Interior's Orders to
Support Military Operations, GAO-05-201 (Washington, D.C.: Apr. 29,
2005).
* Homeland Security: Successes and Challenges in DHS's Efforts to
Create an Effective Acquisition Organization, GAO-05-179 (Washington,
D.C.: Mar. 29, 2005).
* Homeland Security: Effective Intergovernmental Coordination Is Key to
Success, GAO-02-1013T, (Washington, D.C.: Aug. 23, 2002).
Lack of Clearly Communicated Responsibilities:
We also found that processes for executing contracts were hindered by
poor communication. As envisioned under the National Response Plan
(NRP), federal agencies responding to a disaster carry out their
acquisition functions through a network of federal, state, and local
agencies. In some instances, the local or state officials determine the
requirements and communicate them to FEMA; FEMA may write and award the
contract or communicate the requirements to another agency that writes
and awards the contract; and then FEMA or another agency oversees
contract performance. This approach puts a premium on aligning roles
and responsibilities clearly and maintaining good communications to
ensure effective execution of the contract.
Our fieldwork identified examples where unclear responsibilities and
poor communications resulted in poor acquisition outcomes. For example:
* FEMA officials stated that a contractor spent approximately $10
million to renovate 160 rooms and furnish another 80 rooms in military
barracks in Alabama that a FEMA survey team identified for use as
temporary housing. To renovate the facility, FEMA headquarters awarded
a contract without consulting local FEMA officials in Alabama.
According to FEMA officials in Alabama, however, the facility was not
needed and they tried to stop the renovation. These same FEMA officials
stated that few evacuees agreed to live at the facility, and when
officials decided to close the facility, it had only six occupants.
* The process for ordering and delivering ice heavily depends on
effective communications between FEMA and USAGE. However, according to
Corps officials, FEMA did not fully understand the contracting approach
used by the Corps and ordered at least double the amount of ice
required, resulting in an oversupply of ice and a lack of distribution
sites available to handle the volume ordered. Additionally, the local
Corps personnel were not always aware of where ice might be delivered
and did not have the authority to redirect ice as shipments arrived,
resulting in inefficient distribution and receipt at the state level.
* FEMA tasked GSA to write three contracts in Louisiana for base camps,
hotel rooms, and ambulances, with a total value of over $120 million.
GSA contracting officers awarded the contracts, but could not tell us
which FEMA officials would be responsible for overseeing contractor
performance. The FEMA official identified as the main point of contact
by GSA did not have any knowledge of these contracts or who was
responsible for oversight. Only after contacting multiple FEMA
officials over a 3-week period were we able to determine the agency
officials responsible for contract oversight.
In commenting on this briefing, GSA officials stated that their role is
to provide resource support in the response phase of a disaster,
meaning they are responsible for executing contracts under the NRP, and
FEMA is responsible for monitoring the contracts. FEMA officials
commented that there needs to be more clarity regarding procurement
roles and indicated one of their goals is to work with GSA to clarify
procurement responsibilities for the future. GSA officials indicated
that the current memorandum of understanding between GSA and FEMA is
being updated to reflect the standards of the new NRP as well.
Related GAO Reports:
* Contract Management: Opportunities to Improve Surveillance on
Department of Defense Service Contracts, GAO-05-274 (Washington, D.C.:
Mar. 17, 2005).
* Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures and
Management Challenges, GAO-04-605 (Washington, D.C.: June 1, 2004).
* Human Capital: Opportunities to Improve Federal Continuity Planning
Guidance, GAO-04-384 (Washington, D.C.: Apr. 20, 2004).
* Contract Management: Coast Guard's Deepwater Program Needs Increased
Attention to Management and Contractor Oversight, GAO-04-380
(Washington, D.C.: Mar. 9, 2004).
Insufficient Numbers and Deployment of Oversight Personnel:
Ensuring that contracted goods and services are delivered in accordance
with the agreed upon schedule, cost, quality, and quantity provisions
as stated in the contract is the purpose of agencies' monitoring
processes. Without sufficient numbers of trained people properly
deployed, however, effective monitoring is hampered and agencies are at
risk of being unable to identify and correct poor contractor
performance in a timely manner. Furthermore, agencies can be at risk of
paying contractors more than the value of the services performed.
Our work indicated that while monitoring was occurring on the contracts
we reviewed, the number of monitoring staff available was not always
sufficient or effectively deployed to provide effective oversight. For
example:
* FEMA's contracts for installing temporary housing in four states had
only 17 of the 27 technical monitors that had been determined necessary
to oversee contractor performance. [NOTE 5]
* USACE officials told us that the "blue roof" program was slowed down
due to the lack of sufficient monitors. [NOTE 6]
Deployment practices did not always provide for appropriate
notification of responsibilities or overlap of rotating contracting
officers and oversight personnel, thus making knowledge transfer and
continuity of contract management operations difficult. For example:
* For four of the contracts we reviewed, officials were either unaware
or not notified by FEMA of their oversight responsibilities.
* The lack of overlap between oversight personnel for a large temporary
housing contract left the most recent contract administrator with no
knowledge or documentation of who had authorized the contractor to
perform certain activities or why the activities were being performed.
While discussing our findings and observations with FEMA officials,
they emphasized that they lacked adequate staffing, but said they have
made efforts to fill staffing gaps. Additionally, FEMA officials stated
they recognize the need for continuity in contract oversight and
indicated they are implementing a process to ensure workload and
knowledge sharing among rotating personnel. However, they also believe
that fewer transition difficulties exist now as a result of hiring more
people and having more oversight officials staying in the affected
areas. GSA officials indicated there may also be other alternatives for
ensuring adequate contract oversight, such as designating GSA employees
to conduct oversight on some contracts. USACE officials stated their
policy is to rotate certain personnel every 29 days to keep personnel
costs to a minimum due to regulations under the Fair Labor Standards
Act. [NOTE 7]
NOTES:
[5] Data provided by FEMA official was dated November 18, 2005.
[6] The USACE manages the Operation Blue Roof mission for FEMA.
Operation Blue Roof provides assistance to storm victims in disaster
areas through the installation of rolled plastic sheeting on damaged
roofs, helping to protect property and allowing residents to remain in
their homes.
[7] 5 CFR § 551.208.
Appendix:
Contributors:
If you have any questions concerning this briefing, please call Bill
Woods, Director, Acquisition and Sourcing Management, at (202) 512-
4841, or John K. Needham, Assistant Director, Acquisition and Sourcing
Management, at (202) 512-5274.
Other key contributors to this report were Penny Augustine, Elaine
Boudreau, Myra Watts Butler, Dave Cooper, Lisa Henson, James Kim,
Victoria Klepacz, Sandy Reigle, Ralph Roffo, Jeff Rose, Moshe Schwartz,
and Shannon Simpson.
Scope and Methodology:
Due to the level of congressional interest in the federal response to
Hurricanes Katrina and Rita, we initiated this review under the
Comptroller General's statutory authority. We conducted our work from
October 2005 through February 2006 in accordance with generally
accepted government auditing standards.
In order to determine which agencies to include in our review, we
analyzed data collected from the Federal Procurement Data System-Next
Generation (FPDS-NG) and agency websites on contract awards and dollar
amounts for Hurricanes Katrina and Rita response and recovery work.
This led us to review three agencies: GSA, USAGE, and FEMA. We
discussed acquisition management issues with, and obtained
documentation from, officials in these agencies, as well as with
employees from other agencies that served in oversight positions on
behalf of these agencies. We also traveled to sites in Louisiana and
Mississippi to meet with agency officials at field locations and
observe oversight practices at contractor locations.
We selected 13 contracts from 12 contractors performing work for the
agencies in our review to analyze in further detail how monitoring
policies and processes were put into practice (see table below). Our
criteria for selection included:
* Minimum contract value of $5 million.
* Variety of missions (type of activity to be conducted under the
contracts).
* Coordination with the Inspectors General and other audit offices to
avoid duplication to the extent possible.
* Contract award and administration locations (to facilitate data
collection and interviews).
Contractor Name: C. Henderson Consulting, Inc;
Contracted Product or Service: Ambulance services.
Contractor Name: Americold Logistics, LLC;
Contracted Product or Service: Transportation, storage, and delivery of
commodities.
Contractor Name: Clearbrook, LLC;
Contracted Product or Service: Base camp construction and operation.
Contractor Name: CS&M Associates;
Contracted Product or Service: Hotel rooms for displaced persons.
Contractor Name: Gulf Stream Coach, Inc;
Contracted Product or Service: Gulf Stream travel trailers.
Contractor Name: Morgan Building & Spas, Inc;
Contracted Product or Service: Travel trailers and shipping.
Contractor Name: Bechtel National, Inc;
Contracted Product or Service: Installing trailers/mobile homes for
temporary housing.
Contractor Name: Fluor Enterprises, Inc;
Contracted Product or Service: Installing trailers/mobile homes for
temporary housing.
Contractor Name: CH2M Hill Constructors, Inc. (2 contracts);
Contracted Product or Service: Installing trailers/mobile homes for
temporary housing (FEMA); site preparation/installation of portable
public buildings (USACE).
Contractor Name: E.T.I., Inc;
Contracted Product or Service: Quality assurance inspectors for
temporary housing.
Contractor Name: Ceres Environmental Services, Inc;
Contracted Product or Service: Temporary roofing repairs ("blue roof
program).
Contractor Name: Thompson Engineering, Inc;
Contracted Product or Service: Quality assurance inspectors.
Source: GAO.
[End of table]
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